. >> chartnado. i like to say the dow finishes its worst week of the year but the past five days have been filled with growing concerns over more than just stocks. interest rates soared. corporate profits are sluggish. even the housing market seems to be cooling off. dark clouds definitely seem to be rolling in at this point. then there's egypt. growing violence in cairo and other cities. have investors and non-investors alike asking the same two burning questions tonight, has the united states completely lost its influence in to the egyptian government. all those stories and more

coming up on "the kudlow report," starting right now. good evening, everybody, i'm bill griffith. this is "the kudlow report". first upping tonight the dow posts its worst week in more than a year closing down more than 2% on the week. the index down more than 576 points from its all time closing high of just a few weeks ago on august 2nd. is this just a pause in the rally, the beginning of a major market correction or the beginning of something even worse? joining us tonight, chapwood vehicles, katie stockton at mk and partners and cnbc contributor. how do you answer that question? i know you're positive on the growth we're going through in the united states. what about lately where we're seeing softness in corporate profitability and now the stock market? >> i'm not loving this. the dollar is going down.

interest rates are going up. gold is rallying. stocks, you know, technically look a little weaker than i would have thought at this juncture. a big expansion in 52 week low. this market is more vulnerable for a variety of reasons. >> ed, gold up sharply. two year highs on the yields on the yield curve here on the long end of the curve. stocks going lower. dollar going lower. are all those markets doing what they are doing for the same reason, do you think? >> i think they are definitely coordinated. i agree with what ron said. everything he just said i agree with with one exception. when they start hitting technical points where we go through those the computers take over and before you know it we could see ourselves down 10%, 15%. top line revenues are the problem. we're seeing weakness across the

board. earnings aren't coming in. gold prices going up. i think we're in for a really rough period. >> katie, stock market moving lower here but we haven't had a 10% correction in this market in quite a while. we had a great year so far. aren't we due for something at this point >> the pull back so far as obviously been very modest maybe 3.4% for the s&p 500. but i think we need to deal with it in context what preceded it. it was a break out to all time high which followed a break out high trade be. the s&p 500 is very bullish. we generally should view pull backs and counter trend moves and buying opportunities. what we look for in terms of saying yes this is the time to get back in is widespread short term result conditions. we have 30% of the constituents of the s&p 500 at reversal levels and that's a start. it's a step in the right direction and that's occurring

near some initial supporter around 1650. >> one thing. what you said katie is technical. we have to overlay fundamentals. the fundamentals are we're not seeing earnings growth or a strong economy and the world markets are not strong. you have to look at that in the context again with those technical indicators. overall this is a scary time. >> i agree people need to be careful. what hasn't been mentioned yet is the uncertainty surrounding not just fed policy and tapering talk that's going on which is a misguided move if they start pulling back in september. >> you don't think the economy is ready? >> certain spots of the economy are strong and some are already being affected by rising rates, housing one of them. the market another. you have this uncertainty who will run the fed. steve liesman said there's a two in three chance it's larry summers. wall street is worried about that pick. i don't think he's the right guy

for the job. i think it's janet yellen, don cohen. >> why are you living? >> you've given me the perfect introduction to john harwood. he tweeted on this very issue today. let me tell them what you said. only potus and a few others really know, but well-informed person on team obama this a.m. pegs summer's chances for fed chair as 2-3. what more can you tell us? >> a few things. we can't emphasize that this is a very closely held thing. so, the people that we're talking to, me and the other people covering this are those who are reading tea leaves, talking to their friends, picking up shards of information. we don't know. we're getting near the finish line. there's a campaign by liberals in the senate, especially, to press for janet yellen. they want to have the first

woman fed chair. they don't like the fact that larry summers said some things that people thought were insulting to women when he was the president of harvard. they don't like his management style, the fact that he supported bank deregulation in the clinton administration. but larry summers seems to be the favorite of the white house staff despite all of those things. the question is, is he going to be the favorite of president obama and as i mentioned today, that this source said two in three chance of summers, another source i talked to also said that the indication that he was getting of that it was going to be summers having earlier thought it was going to be janet yellen. >> he was treasury secretary. there was a comfort factor that exists between president obama and secretary summers, former secretary summers at this point. isn't it possible it's simply not just what these people know it's who they know. he knows larry summers better than he knows janet yellen.

>> not only that. he went through the fire with larry summers in dealing with the financial crisis in late 2008/early 2009. >> the trust factor there. >> exactly. there's a trust factor. and let's remember that the reason larry summers had been treasury secretary under bill clinton and was the top economic adviser to president obama was that they had tremendous regard for his grasp of the economy not just in the united states but also globally so there are a lot of things in play. a lot of people don't want summers to get the job. i under that. i heard ron a moment ago. the question is who does president obama want and we'll find out this fall. interestingly, bill, it's going to come down that decision right as washington is dealing with the fiscal standoff that we got coming on and that could provide an added wrinkle because larry summers, without doubt will be confirmed if nominated by the president but might be more difficult and more static than

janet yellen and the president has to figure out how much political capital he wants to invest in that. >> indeed. john harwood, good job. thank you. we do have a confluence of events coming this fall, ron not only choosing the new fed chair but the debt ceiling is still to be dealt with, the budget. obama care will have to be coming up in many areas. a lot of things to be dealt with all at the same time that will have a meaningful impact. >> the fed stuff is central. larry summers has voiced to a certain extent and this came back his distaste to quantitative easing. look, if i had to do it, i have a dream speech about the fed right now, ben bernanke staying for a third term. larry summers is known to be a bull in the china shop. there's a much different process in the fed than there might be in treasury, other offices in

washington. >> katie, fundamentally yields are going up, apparently as we anticipate when the fed will begin pulling back on the quantitative easing. technically you could see yields going much higher than they are from here, right? >> that's right. so obviously yields are on a very long term down trend. we saw the ten year treasury yield in particular break up in its consolidation phase and tests very important resistance on 2.85%. break out above that level and my work target is 3.75. obviously that's a major move. that's essentially an proximate nation of the 2011 high. >> are you agreeing with that? >> also people have to also understand that from an investment standpoint when you start seeing the ten year treasury rise a lot of people think that's negative for stocks. well for a period of time that actually helps multiple expansions. it's not a bad thing. i looked at a lot of research from morgan stanley recently and i want shows without question that when you see the ten year

treasury start to rise for a period of time multiples extend on the stock market. it's not a negative thing. one of the other things i got to add, it's amazing to me, doing this for as long as i have, how much talk we have on what's going on in washington related to the stock market, who the new fed chairman is. i look forward to the day we don't care who the fed chairman is because the free market is doing what it's doing not because of a fed chairman. >> that won't happen for a while. >> not in our lifetime. >> if interest rates are rising gently along with the stengthensistengthens i ing economy. it's the rate of change that's problematic. when rates spike up stocks run into problems and then you start dealing with issues that we have seen in a few other periods in time that were not terribly pleasant. >> still historically speaking those rates are low. >> triple off the loss.

>> very high. folks thank you all for joining us. ed, ron, katie, appreciate your contributions. now we talked the markets but what about the still barely recovering economy itself? what will rising rates and a slowing housing market do to jobs and everything else that's important? that's coming up next. later violence continues to grow in egypt. this could be the weekend the street fighting turns into an all out civil war. the question is when should the obama team shut off the foreign aid to the cairo regime. that's coming up. don't forget the kudlow correctedo, free market capitalism is the best path to prosperity. he's told me that for years. "the kudlow report" is coming back right after this. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids.

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welcome back to "the kudlow report". moody's downgrading the debt of cook county, illinois which includes the city of chicago. crook county says it has unfounded pension liability but a better estimate of that is twice as much. moody's says it will be a formidable challenge to get serious pension reform from the state legislature. thank you. we know we had a market selloff this week but there were some other dark clouds on the

economic front as well. mixed economic data out just today showed housing starts up almost 6% in july. that was on track with a steady recovery but still below expectations and there were some intriguing details on that which we'll get to. august consumer sentiment hit its lowest level in four months. could the already very fragile recovery be heading for a brick wall of some kind? let's bring in michael pinto. and steve. steve, there's a definite change in tone on wall street right now. some of the economic data is getting soft. some of the corporate profit reports have not been all that great. what's going on here? >> you're finally getting around to people realizing what's happening this economy is not accelerating the way people anticipated. >> quantitative easing is not working. >> interest rates happen to be very important even at this low

level. that becomes a problem that people keep on saying interest rates are low. they are low. the problem is wage and salary income as a share of gdp is at historical low level. those interest rates have an effect on ability to finance. >> michael, those rates are starting to rise. we talked about that. yield are at a two year high. how much higher do they go? >> first they should be around 4% unlease you're telling me wru europe is about to collapse. without those items in place spring of 2010. >> you think q1 -- >> the average went back to 1971 is over 7%. 4% is still dirt cheap and still in bubble territory. >> what do you think is going to happen? >> i think it's going to 4% by the end of q1. then i think bernanke stops talking about tapering because the economy is 100% addicted to

artificially produced inflation and low interest rates. the economy is weak. we're growing at 1.4% in the first two quarters of this year. if you double count gdp and pretend there's no inflation. >> the housing market, steve, this report we got this morning, housing starts, individual home, single family construction was down 2.2%. apartment construction was up 26%. we've become a nation of renters here. >> 100% correct. >> fewer people choose not to or can't afford to buy a home. >> that's correct. the point going back to what you were talking about before is that unfortunately at 4% this economy can't handle that level of interest rates. 4% will cause this economy to stall out. we got back to those levels of 4% and three months later we had a gdp of 0.4%. this economy can't handle that. >> that's a sad story. >> it is. >> it's a reality. also the question comes down

will interest rates stay low? yes. because there's no inflation. >> i know you disagree with that. >> for decades and decades the price of oil was what? $20 a barrel. it goes to 150. because it goes back to 110 no inflation. home prices are up 1% year-over-year. how did they get there? where did the money go? of course there's inflation. >> it's extraordinary volatile. >> so even your own fundamental factors are confusing you. the other thing you have to turn around and walk away from interest rates are extraordinary important. that's a keynesian concept. the inflation isn't there. ku go out and buy -- >> you created a bubble in the bond market, a bubble in the housing market, a bubble in the

stock market. zmu go out buy anything you want, electronics, refrigerators, automobiles, they are not going up in prices. >> money supply -- >> q2 is useless. the velocity. velocity -- >> it courrelates -- >> let me step in here. one side is talking economic theory and statistical stuff. you're talk being anecdotal stuff. inflation is going up. we pay more for food and gasoline, airline. movie tickets are going up. >> the reality is quality adjustment of these prices are not going up. the same car that you wanted to buy six months ago is cheaper now and done through the financing. >> i have run out of time. let me ask you this. are we too impatient about the economy? we're very -- we're talk here tonight about how we're

disappointed. it's been five years of qe. >> quantitative easing has been the stlouolution to this point. >> it's a poison that got to us the point much creating a potential complete collapse of our bond market. we have 49 trillion in direct. we have 54 trillion today. interest rates rise. unsustainable, unserviceable and that's the direct cause of bernanke's qe. >> no inflation you'll head to deflation. >> you think deflation is still a possibility. >> fed's balance sheet is 300 trillion. >> i should have stopped when they were agreeing on quantitative easing. thank you both. good to see you. now the republican party follows through on a threat to some of the major networks.

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the last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today. welcome back. i'm bill griffith in for larry tonight. it's a race a lot of people want to see in 2016. new jersey governor chris christie versus hillary clinton. >> good evening. the republican national committee has decided not to partner with cnn or nbc news for

2016 presidential primary debates. the problem according to the rn cbot networks plan to produce documentaries about hillary clinton to be aired in the next couple of years and there's a lot of buzz about a speech that chris christie gave last night to the rnc. he seemed to be hinting at a presidential run when he said i'll do anything i need to do to win. he also took some veiled shots at potential opponents senator rand paul and governor bobby jindal. look at this video from today as well. solar panels being installed on the roof of the white house. the project was actually announced way back in 2010 when then energy secretary said it represents the president's commitment to solar energy opinion we know alex rodriguez was a chaeeater he may be a rat. he passed on information about

other players using performance-enhancing drugs. >> good stuff. stick around we want to talk more about this. let's talk about the economy, very important right now. we know it's not recovering as fast as we would like. is president obama going to be blamed for that? let's bring in our free market friday panel tonight. keith boykin and former bush/cheney adviser. keith, is the president going to take the fall for this? we've gone how many years now with quantitative easing and we're still talking about a sluggish economy where unemployment is too high, job growth is not great and we're starting to see signs of wear and tear on the housing market. >> we're losing 850,000 jobs a month when president obama came into office. just remember these two numbers. at this point in bush's administration, george w. bush administration we created only 177,000 private sector jobs. under the obama administration

we created 3.1 million private-sector jobs. >> is that enough? >> no. but considering the headwinds we were facing this economy is growing much more rapidly than it was. >> we're being too impatient expecting more? >> don't think people are being too impatient the reality is there's unprecedented obstruction from republicans in congress who are been against every possible jobs measure. >> those talk points were very good the first three years of the obama administration. there's no question about it that the obama administration had unbelievable headwinds going into the first term. this is their second term. this is year number five. one could make the argument that the obama administration's policies have taken effect and unfortunately, and i say this with grave sadness is that this is a jobless -- very much so. here's why i'm sad. because there's double digit unemployment in the black community. you know this better than i do. >> there was double digit

unemployment in the reagan administration. >> the obama administration promised us and the president said this himself if in fact i do not have a robust economy quote i should be a one term president. >> the american people re-elected him. >> from a legacy perspective this president will go down in history -- >> he's created more private-sector jobs. >> what about ben bernanke's contention they've done all they can with monetary policy it's the fiscal policy that's a drag on the economy. don't we lay that to congress. >> that's a very good point. the fact of the matter is from a constitutional standpoint the congress controls the purse. however the president, meaning president bush but president obama have some blame. the fact of the matter is we have a very dysfunctional executive and legislative brarj a -- branch and they have to work together. what the president needs to do

is lead. >> you can't lead a group of people who are not willing to compromise. >> richard nixon did it. >> no other president has faced the obstruction that we're facing right now. what's going on when reagan was president. even when tip o'neill was speaker of the house congress was passing 600 bills a session. last session they passed 238. they've decided to be opposed to any possible legislation that president obama proposes and you can't work with people who are unwilling to negotiate. that's problem. >> very quickly. the democrats controlled the house and senate for the first two years. >> you had filibusters. >> the president couldn't even lead his own caucus. >> with all due respect i'm tired about talk about the past. let's talk about the future. what can we do to jump start the economy. we'll continue the conversation. we'll have a lot more from robert and keith coming up here.

>> jackie is smiling. >> i wanted to get a word in. >> she's the smart one. strange out of the fray. the whole world is watching egypt. it's consumed by massive protests and killing. is all out civil war on the horizon and when should the u.s. completely break ties with cairo? we have a report from egypt when we come back after this. at a dry cleaner, we replaced people with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally.

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welcome back to "the kudlow report". i'm bill griffith in for larry. this half hour a blockbuster story in the "the washington post" shows the nsa surveillance program has illegally gathered information on americans more than 2,000 times. president obama's soothing words about this ringing hollow. the dow has wrapped up its worst week of the year what did you look for or what do you look for on monday and the rest of next week for your monday. we'll get some very specific checkpoints. bust first it was another day of deadly violence in egypt. let's go to cairo where richard

engel is there for us tonight. >> reporter: bill, the muslim brotherhood had been calling for a dave rage and that's certainly what we saw today. it began with a protest of a few thousand people in ramsey square by the train station right in the center of cairo. but just after a couple of hours there was protests became riots, fires were lit. exchanges of gunfire between the protesters and the security forces. and then as the day progressed about 100 people were killed in this demonstration. but what i think is most disturbing while that death toll alone in a city of 18 million is disturbing enough is the way this country seems to be dividing in a really dangerous way. you'll have supporter of the ousted president mohamed morsi who feel that they were robbed of their rights, they want a more islamic agenda for this country, many of them are backing the muslim brotherhood. they are the ones who are being killed in large numbers. they are increasingly angry and

they are feeling increasingly alienated in this society. on the other side you have people who are supporting the military, who fully back this crackdown and cairo today is breaking apart along these two lines, breaking into camps. you have certain neighborhoods in the city where they support the military, other neighborhoods now where they support the muslim brotherhood. as we were driving around after we had been at this protest which turned into a riot we were on our way back to the bureau. we went through checkpoint after checkpoint. there are not normally checkpoints here in cairo. these were civilian checkpoints. people were armed with swords and knives and clubs and leaning in our car trying to figure out which side we were on, muslim brotherhood or military. that's a very dangerous development in a country this size and a country this important. bill? >> nbc news richard engel. nobody more qualified to cover that story than richard. he's been all over the world.

with more and more politicians from both sides of the aisle calling for the u.s. to pull out aid to egypt, what should president obama do next? joining us tonight pleased to welcome back general barry maccaffery and former clinton house aid and former bush/cheney senior adviser. general, let me ask you. to this point we're led to believe the military leaders in egypt have completely ignored the pleadings from the world leaders and they are just carrying this out unilaterally. is there anything the united states can do to get their attention short of military operations? >> probably not. you know at the end of the day the military essentially run egypt since 1948. at the end of the day they will still run it. the only unlikely outcome is democracy. the worst out come is civil war which is one step short of admittedly right now. so, you know, i think we're going to suspend all aid to them

until we sort out which way it's going. >> you think we will suspend financial aid? >> i think we should, yeah. we can suspend it. what we need to do is watch this play out and influence it we hind the scenes to minimize the likelihood of bloodshed, minimize the threat to israel and keep the canal open. those are essentially our three objectives it stems me. >> keith, what do you think? >> think that we have to make sure that we do move in a deliberate manner. the president made the first step in cancelling the joint military exercises. the general is right. at some point we'll suspend aid but i don't think we should rush into it because we want some leverage. >> what leverage do we have now? >> we have $1.5 billion in aid we give egypt. if we stop giving any -- >> that doesn't impress these military leaders. >> it's not enough to make a difference. they have internal pressures. all politics are local. there are internal pressures influencing what's going on there. we don't have fleet leverage.

do we want to give up all our leverage. >> agree with the general. he hit it on the head. the fact of the matter is the only way they perhaps may listen to what we have to say is by our pocketbook. not only suspending the military but threatening to cut it off -- suspending it now and cutting it off in the future it increases our leverage. it sends a strong signal we mean business. egypt is our ally. but the fact of the matter is that they are not listening to us. >> you think they are still an ally at this point? >> yeah. because of the suez canal. it does matter what happens over there. we clearly want democracy to work. but i think the general is right. behind-the-scenes i'm sure the folks that are talking behind-the-scenes. you got to get this right here. >> what does this do the balance of power? egypt was and has been an ally of ours. we colleen on at that time,

hosni mubarak to help out when we needed to separate the palestinians and israelis and talk to the syrians and so on down the line. that's all gone. now what? >> well, you know, it is the center of the arab world for cultural reasons. it's 85 million people. the most powerful arab force on the face of the earth. we have a situation facing us that we essentially can't turn around. 20%, 30% of that country is supporting the muslim brotherhood. they are ready to fight about it. the majority of the country did not want to leave, you know, the system that essentially provided tourism and open commerce to the canal. so how it will play out is hard to say. there is one disaster facing us and that would be all out civil war. to see the syria experience happen in egypt would be a real disaster. and so i think president obama is doing as best as you can along with chuck hagel and

secretary kerry. >> no good options here. the israelis are concerned their neighbor is going through turmoil and they have the issue of syria to their north. i think you have to be able to move therebily in this again. i don't think the u.s. should rush in and do too much too quickly. the general is right we should be pursuing those actions but be careful. >> just tell the tone from our conversation here. there's just this dismay that we all feel that it's happening again in another country in that part of the world. they can't get along can they? >> obviously. historically they have never gotten along. keith is right. there are no good options. the president is doing the best he possibly can. i wish he would be stronger, more clearer on this because he has sent very nuance messages but it's a bit confusing. >> what about that, keith? the president to this point has been techted on very foreign policy situations but for the most part he hasn't had to take

a lead role on some issues like this. should he take a lead role or should this go to the united nations? >> united states is always leading. we're not leading publicly by making statements and declaration but our country is leading privately because of the influence we have worldwide because of the money we give out to various countries. look what happened to syria and libya. two instances where one is still continuing, two instances where the u.s., the government was being pushed to do more. we were pushed to even put boots on the ground by some people. obama administration decided wisely to pursue this very strategically and carefully and cautiously. >> general, let's talk down the road. you've said the worst case scenario would be all out civil war in egypt and richard engel just told us tonight we're that close to it right now. if it were to happen what should our response be? would it make sense, i'm just talking blue sky here, to send a few ships closer to that region just in case?

>> well, you know, richard engel is the best person i've run into lately for understanding the mood in these arab countries. there is almost nothing we can do to a giant heavily armed land locked arab country and certainly signalling military seriousness with naval elements or whatever is a waste of time. we want, again, to stop the violence, keep the threat to israel from blowing up and keep the canal open. other than that we don't have -- they don't have a lot of oil. they are not divided terribly among sunni and shia and kurds. a lot of these problems might come one control in the coming six months. we better hope they do because we don't have many options if they don't. >> general always good to see you. thank you for joining us tonight. keith and robert stick around because i am as well. >> good glad to hear it. >> now we have to discuss the other big story eroding

confidence in the obama team courtesy of edward snowden. "the washington post" is out with a blockbuster report showing the nsa surveillance program looks a lot worse than we've been told. we'll have that story and more when we come back. clients are always learning more

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earlier tonight we talked about the markets' reaction to john harwood's report from this morning that larry summers has a 2-3 chance in becoming the next federal reserve chairman. there's political reactioning tonight from cantwell. if he wants her support he needs to give her a mea culpa. is summers too poisonous to pick? we continue with keith boykin and former bush/cheney adviser raymond. who is the front-runner early on janet yellen and now larry summers has overtaken her. >> there's little indication that president obama's press conference last week when she flubbed janet yellen's name

she's not at the top of her list. i'm not a big fan of larry summers. i think he's a reasonable candidate but i think janet yellen has distinguished herself as a better candidate. >> why do the liberals want janet yellen other than she's the first woman -- >> don't think because she's the first woman fed chair but you look at her record, the "wall street journal" did the survey of the fed policymakers and she was the top one. she's been better in forecasting than anybody else. so why wouldn't you want to have someone who has that record. larry summers has a questionable record from his background working with my boss in the clinton administration in the deregulation area and work with bob rubin. we don't want to go back to that same policy. >> that would serve him well. >> absolutely. >> inside baseball game here. larry summers is a paritisan an

a hot potato. he has a relationship with the president. what we know about this president he's very loyal to his team. larry summers was there from the beginning from the bail out days in the early year of the obama administration. what janet yellen has she is very cerebral, she knows the partisan game. she knows the fed. she's a woman. the president likes that too because the president is very cerebral and very smart. the question becomes quite frankly does the president go with someone he knows and trust or make history and go with janet yellen. >> the president was asked about who the next fed chair should be. he pointed out the two things that need to be dealt with. that is the -- >> unemployment -- >> he started with the inflation rate and jobs thing. the way i read it he seemed to be blaming ben bernanke nor not doing a better job of creating jobs with the monetary policy. >> didn't read it that way.

>> my point is i wonder what he expects larry summers to do. >> stabilize interest rates and look at this from a quantitative standpoint. >> robert may very well be right but -- >> there you go. >> if that's what the president wants he's moving in the wrong direction. clearly unemployment, the need to create jobs and i think the fed mandate to continue with some sort of qe or some sort of effort to have some sort of monetary stimulus will be essential. we need a fed chairman who will have that perspective and janet yellen is more likely to take that perspective. that's why, i would much rather have a candidate like janet yellen. she's the better candidate. >> this is tough decision for the president. >> think somebody said one of the most important he'll make

while in the white house. >> because of his legacy. >> right. i want goes past his administration. switching gears. one week ago when the president said this. remember? >> what you're not reading about is the government actually abusing these programs, and listening in on people's phone calls or inappropriately reading people's emails. >> he was talking about the nsa, obviously. you developed a tick suddenly when he said that. >> yeah. >> i think he probably refwrets it too. we had the report in the "the washington post" that there may have been surveillance violations, as many as 2,000 conducted by the nsa on average citizens. >> most minor, most inadvertent. this is a big headache for the administration. the president wants it to go away. the only way for it to go way if there's greater congress involvement and more transparency. i on the see this administration is moving swiftly enough on

those issues. i think they had a tenure that they are tone deaf. president obama is thinking that he's trying to do the right thing. he thinks he want to make this transparent. but he's expecting us to trust him too much and this is an issue that requires us to go beyond trust, it requires the government to put in place some sort of safe guards that we don't have to trust any president because he's not always going president. >> the republicans, it's not an easy one for you guys. >> this is a complex human sprawling bureaucracy that made a lot of human mistakes. the president, no matter who he or she is. every morning they get threat assessments. they know what the bad twice are up to. with the nsa they have to be right 1,000% of the time. terrorists have to being right 1% of the time. >> government people will make mistakes. we know that.

the problem is people didn't know they were doing that. >> you can't have more transparency with the nsa because if we have more transparency then the bad guys know what we're doing. >> transparency to congress, transparency to the oversight court. you have to make sure there's somebody who is looking over other than the president. >> the problem with that the nsa says of course we'll give it to congress, 535 members of congress will leak it. >> you give to it the intelligence committee chair and the intelligence court. >> these are spooks who spy on spook whose are paranoid about themselves. >> all the more reason they shouldn't be trusted with this information without some sort of oversight. >> all that and we find out what area 51 was all about. no big deal after all. said big deal. guys thank you both for joining us tonight. i appreciate it. will next week be as bad for stocks as this week was.

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okay. tough week, we know that for the markets. what should you expect on monday after this rough week on wall street? back with ed, michael and ron. i know it's tough getting a word in edge wise. what are your looking for in the near term either good or bad

that will affect how you're going to invest your money? >> katie said it as well, all technical stuff at this point. there's nothing big announced next week. some programs kick in with futures looking at what happened in asia monday night or sunday night coming into monday we could see some more selling because the selling pressure is there. so you are probably going to see computer programs kick in and start taking out these support levels. i would not be surprised to see another really rough week next week. >> michael? >> i'm looking for more crumbling in the bond market. even if the schizophrenia fed isn't ready to taper. >> i tweeted today. i'm on twitter. >> i seen that. >> the bond vigilantes are saddling up. >> 1.4% to 2.8%. and more pressure on new and existing home sales.

>> we don't have a jackson hole. mr. bernanke is not making any speeches. >> he's near the exit door. he doesn't care. >> what i worry about is what mike just said, rising bond yields, lack of clarity from the fed, lack of certainty around tapering which is not tightening. >> he got me in my heart. >> ed, are we not buying the dips? what happened in >> right now the pressure is there and there's a lot of smart people. getting out of the way. it's going lower. >> ron, what else could the fed, $85 billion. if they went from $85 billion of buying ibm to zero how is that not heightening? >> they are reinvesting proceeds and continuing to buy and then if they taper they will take down 10 or 20 billion a month. the fed is not in true terms tightening and quite frankly they still should be given inflation levels are falling around the world and

deflation -- >> that's nonsense. >> if you look at every inflation indicator -- >> let's be polite. let's ask him a leg question. we got time for this? >> i don't have time for this. you guys have to move on and we'll talk about who is starting for the jets tomorrow night. >> tim tebow. >> thank you for watching us. larry is back on monday and joined by wisconsin governor scott walker. good night. what's this?

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>> the following is a cnbc original production. [ music ] >> marijuana is the most profitable illegal narcotic. >> this is a huge business. uh, in california alone, it is the number one crop. >> and there's at least 13 gardens within a mile radius of our home. >> thirteen gardens right around your house? >> mmm-hmm. >> yes. >> wow! >> thousands of growers, millions of users, and a market in the billions. >> how much money was coming in to your marijuana smuggling operations every year? >> about 50 million. >> it's a multi-billion dollar business rife with guns, gangs, and plenty of money. i'm trish regan. join me for an unprecedented look inside america's marijuana industry.